More People Are Paying Their Credit Cards in Full Every Month

American credit cardholders have started to change the way they use credit cards, with an increasing share of cardholders opting to pay their bills in full each cycle, rather than carry a balance. This insight comes from the latest Credit Card Market Monitor Report from the American Bankers Association, which looked at the credit card market in the second quarter of 2014.

The report splits credit card accounts into three categories: revolvers, transactors and dormants. As you might have guessed, dormants are open accounts with no activity, and they made up 29.8% of the market in Q2, up 0.8 percentage point from the first quarter. Revolvers — accounts with balances carrying over from month to month — make up the largest group, though its share fell from 42.7% to 41.2% in the second quarter. The smallest group is transactors, or accounts paid in full each billing cycle. Transactors made up a slightly greater share in the second quarter than in the first, up 0.6 percentage points to 29%.

It’s a small change, but it’s one that’s slowly becoming a trend. Molly Wilkinson, executive director of ABA’s Card Policy Council, elaborated on the data in a news release about the report: “The shift away from revolvers reflects a changing consumer marketplace … More and more consumers are using their credit card as a payment tool rather than a form of debt.”

The report breaks down behavior by account, not consumer, so if an individual has a credit card she doesn’t use, pays another in full but carries a balance on her third card, she’d fall into all three categories. While it’s a good thing to see a smaller share of accounts carrying interest-accruing balances (though some of those cards may have 0% financing), it’s not necessarily a positive thing to see a larger share of dormant accounts. The best way to build credit is to use it responsibly, and if your credit card is your only form of credit, leaving it inactive could mean the issuer decides to cancel the card. That would leave you without access to the line of credit when you need it and it could also hurt your credit score.

The most interesting takeaway from the report is that a large share of credit cards carry balances. Consumers with credit card debt may face months or years of trying to pay down that debt, especially for large balances and cards with high interest rates. It’s pretty easy to figure out how long it will take you to pay off credit card debt: You can plug your information into this credit card debt payoff calculator to help you with your debt payoff timeline, but keep in mind adding to your balance or not sticking to your plan will keep you in debt longer.

Credit cards can be great financial tools, but millions of consumers know what it’s like to take spending a little too far or have no other means to make ends meet. Credit card debt can be difficult to conquer, but the lower you keep your credit card balances in relation to your credit card limits, the better your credit score will be, and the easier it will be to stay on track to your financial goals.